Crisis, what crisis? Cable (mostly) OK in crunch

The finance panel here at Cable Congress was a frank but fairly upbeat affair. It is no secret that with most MSOs controlled by highly leveraged private equity capex is going to be scarce. John Hahn of Providence (which has major positions in KDG and ONO) confirmed as much, “investment is only going to be made if the return in it is certain and fairly neat term.”

Generally, though, the panel agreed cable was in OK shape â€“ its services are either utility or counter cyclical (in the entertainment space) and that meant cash flow would remain strong. But there will be bumps; even though many private equity firms restructured debt in 06 and 07, the depth of the lending crisis means assumptions then about having further access to the credit markets are having to be rethought. ONO, in particular, has a looming crunch 12 to 15 months down the road and both Hahn and Richard Alden, the outgoing CEO, agreed there would have to be a major capital restructure or sale. As Alden admitted, “if we had our time over again, would we go through with the mergers of 2005, no, but that's hindsight.”

In terms of prospects, Philip Meier-Scherling MD at Deutsche Bank, was fairly upbeat believing a recovery of sorts was probably less than a year away and stock and debt markets would be quick to recognise (or remember) the good fundamental value of cable